So wrote Ad Contrarian Bob Hoffman, the retired CEO and chairman of Hoffman/Lewis Advertising, in June 2013 on a $7.5 billion scandal that has been developing
under the digital radar in the advertising world for the past few
years. The three main allegations, according to those who are making
These charges have not seen much discussion within
the online marketing community. But the allegations have the potential
to affect everyone involved in online advertising—ad agencies, in-house
departments, agency and in-house digital marketers, online publishers,
media buyers, and ad networks. An entire industry—billions of dollars
and thousands of jobs—is at stake.
And it all starts with a single impression.
Online advertising is based on an "impression"—without the
impression, then an advertisement cannot be viewed or clicked or provoke
any other engagement. The Internet Advertising Bureau,
which was founded in 1996 and "recommends standards and practices and
fields critical research on interactive advertising," defines
"impression" in this manner:
a measurement of responses from an ad delivery system to an ad request from the user's browser
In another words, an "impression" occurs whenever one machine (an
ad network) answers a request from another machine (a browser). (For
reference, you can see my definition and example of a "request" in a
prior Moz essay on log analytics and technical SEO.) Just in case it's not obvious: Human beings and human eyeballs have nothing to do with it.
If your advertising data states than a display ad campaign had 500,000
impressions, then that means that the ad network served a browser
500,000 times—and nothing more. Digital marketers may tell their bosses
and clients that "impression" is jargon for one person seeing an
advertisement one time, but that statement is not accurate.
because a server answers a browser request for an advertisement does
not mean that the person using the browser will see it. According to
Reid Tatoris at MediaPost, there are three things that get in the way:
Tatoris crunches all the numbers:
with the notion that only 15% of impressions ever have the possibility
to be seen by a real person. Then, factor in that 54% of ads are not viewable (and we already discussed how flawed that metric is), and you're left with only 8% of impressions that have the opportunity to be seen by a real person. Let me clarify: That does not mean that 8% of impressions are seen. That means only 8% have the chance to be seen. That's an unbelievable amount of waste in an industry where metrics are a major selling point.
Essentially: If you have an online display ad budget of $100,000, then only $8,000 of that ad spend has the chance to put advertisements in front of human eyeballs. (And that's not even taking into account the poor clickthrough rates of display ads when people do see them.)
If you are paying $0.10 per impression, then the $10,000
that you will pay for 100,000 impressions will result in only 8,000
human views—meaning that the effective CPI will actually be $1.25.
In a Digiday article, Jack Marshall interviewed a supposedly reformed fake web traffic buyer on how the scheme works. Here are three excerpts:
How and why were you buying non-human traffic?
were spending anywhere from $10,000 to $35,000 a day on traffic. My
conversations with [these ad networks] were similar: They would let me
decide how much I was willing to pay for traffic, and when I told them
$0.002 or below, they made it clear they had little control over the
quality of traffic they would send at that price. Quality didn't really
matter to us, though. As a website running an arbitrage model, all that
mattered was profit, and for every $0.002 visit we were buying, we were
making between $0.0025 and $0.004 selling display ads through networks
and exchanges. The biggest determinate of which traffic partner we were
spending the most money with was pageviews per visit. Since we were
paying a fixed cost per visit, more pageviews equaled more ad
impressions. Almost none of these companies were based in the U.S. While
our contacts were in the US and had American names and accents, most of
the time we found ourselves sending payment to a non-US bank.
In other words, the publisher would allegedly pay an ad network
$0.0020 for a visit from a bot, and the resulting ad impression would
garner $0.0025 to $0.0040 in revenue—that's a gross margin of 25% to 100% for the publisher for doing nothing! It's no wonder that so many websites around the world may be allegedly involved in this practice.
Do you think publishers know when they're buying fake traffic?
know. They might say "we had no idea" and blame it on their traffic
acquisition vendor, but that's bullshit, and they know it. If you're
buying visits for less than a penny, there's no way you don't understand
what's going on. Any publisher that's smart enough understand an
arbitrage opportunity is smart enough to understand that if it was a
legitimate strategy that the opportunity would eventually disappear as
more buyers crowded in. What we were doing was 100 percent intentional.
Some articles revolving around bot traffic paint publishers as rubes who
were duped into buying bad traffic by shady bot owners. Rather, I
believe publishers are willing to do anything to make their economics
Do networks, exchanges and other ad tech companies do anything to stop this from happening?
worked with a major supply-side platform partner that was just wink
wink, nudge nudge about it. They asked us to explain why almost all of
our traffic came from one operating system and the majority had all the
same user-agent string. There was nothing I could really say to answer
that question. It was their way of letting us know that they understood
what was going on. It wasn't just our account rep, either. It was people
at the highest levels in the company. Part of me wished they'd said
"You are in violation of our TOS and you have to stop running our tags."
I would have been happy with that. But they didn't; they were willing
to take the money.
If these stories are true, then ad networks do not care that the
impressions are from bot traffic and publishers do not care that are
getting bot traffic because they are both making money. Who gets hurt?
The companies advertising their products and services.
It's not only that online display ads are alleged to be amazingly
useless and that many publishers and ad networks are allegedly involved
in sleazy deals. A March 2015 investigative report in Ad Age found the following:
Kickback payments tied to U.S. media-agency deals are real and on the rise, according to Ad Age
interviews with more than a dozen current and former media-agency
executives, marketers' auditors, media sellers and ad-tech vendors who
said they'd either participated in such arrangements or had seen
evidence of them. The murky practice—sometimes disguised as
(undisclosed) "rebates" or bills for bogus services—is being motivated
by shrinking agency fees and fueled by an increasingly convoluted and
global digital marketplace. "It's really ugly and crooked," said one
ad-tech executive who described receiving such requests.
Some arrangements go like this: A
large media shop, poised to spend $1 million with that ad-tech
executive's firm to buy digital ads last year, asked for $200,000 to be
routed back to the agency's corporate sibling in Europe. The $200,000
would pay for a presentation or presentations by the sibling's
consultants. But these types of presentations aren't worth a fraction of
the price tag, according to numerous executives dealing with the same
issue, who spoke on condition of anonymity for fear of losing business.
Essentially, here is what is allegedly happening:
I think we can see who the loser is—everyone is making money except for the clients.
During the same month as the Ad Age report, former
Mediacom CEO Jon Mandel reportedly told the Association of National
Advertisers Media Leadership Conference that widespread "media agency
rebates and kickbacks" were the reason that he left the agency business.
I have yet to hear about this issue being addressed in any talk,
panel, or session at a digital marketing, martech, or adtech conference.
Prior to today, I have seen only one article each in two major
publications in the online marketing industry. (Mozzers, please correct
me if I am mistaken and have missed something major on this topic.)
Why is no one talking about this?
No marketing agency wants clients to know that 92% of its display
advertising spend is wasted. No advertising manager wants the CMO to
know that only 8% of the company's ads are reaching people at 100% cost.
No CMO wants the CEO to know that 92% of the entire ad budget is being
flushed down the digital toilet.
I myself would probably have not been permitted to write this
article when I held various agency positions in the past because I
managed clients' online advertising and some PR and digital marketing
clients of the agencies were advertising networks themselves.
(Today, I am the director of marcom for Logz.io, a log analytics
startup, and I have the luxury of being accountable only for the results
of my in-house work—and I do not plan to use online advertising anytime
soon. Still, I was a journalist in my first career years ago, and I
wanted to write this report because I think everyone in my beloved
industry should know about this explosive issue.)
Hoffman, the retired ad agency CEO who I quoted at the beginning, puts it better than I can:
an agency answer a client who asks, "You mean more than half the money
you were supposed to be custodian of was embezzled from me and you knew
nothing about it?" How does an ad network answer, "You mean all those
clicks and eyeballs you promised me never existed, and you knew nothing
about it?" How does a CMO answer his management when they ask, "You mean
these people screwed us out of hundreds of thousands (millions?) of
dollars in banner ads and you had no idea what you were buying?"
is in jeopardy and everyone is in "protect" mode. Everyone wants to
maintain deniability. Nobody wants to know too much. If display
advertising were to suffer the disgrace it deserves, imagine the
fallout. Imagine the damage to Facebook, which at last report gets over
80% of its revenue from display. Imagine the damage to online
publishers whose bogus, inflated numbers probably constitute their
margin of profit.
If the comScore findings
are correct and projectable, it means that of the 14 billion dollars
spent on display advertising last year in America, 7.5 billion was
worthless and constituted some degree of fraud or misrepresentation.
But clients, CMOs, and CEOs are going to read one of these
articles one day and start asking uncomfortable questions. I would
suggest that Mozzers—as well as all digital marketers and
advertisers—start thinking about responses now.
Google, to its credit, has disclosed that 56% of its digital ad impressions are never actually seen—of course, the report was also released with the announcement of a new ad-viewability product.
Ginny Marvin summarizes at Marketing Land:
viewability measurement tool, Active View, is integrated into both the
Google Display Network and DoubleClick. Advertisers can monitor
viewability rates and buy ads on a viewable impression basis rather than
by served impressions.
Google also announced an update to
DoubleClick Verification last week, which includes viewability
monitoring, ad blocking, a content ratings system and spam filtering
The goals of the Media Rating Council
(MRC), an industry organization founded in the United States in the
1960s following congressional hearings into the media industry, are:
The MRC has certified
"viewable impressions" as a legitimate metric (as opposed to "served
impressions"). The Interactive Advertising Bureau (IAB), mentioned
earlier, issued guidelines in December that online advertising networks should aim for at least 70% viewability.
Facebook, for its part, announced in February 2015:
We are working with the MRC and a
consortium of advertisers and agencies to develop more robust standards
for viewable impressions. Our goal is to work with the MRC, our
partners, and industry leaders around the world to help apply further
standards for feed-based websites like Facebook, mobile media and new ad
The American Association of Advertising Agencies, Association of National Advertisers, and IAB announced last year that they would create a new organization, the Trustworthy Accountability Group, to fight problems in the online advertising market and do the following:
TAG now consists of representatives from Mondelez International, JCPenney, Omnicom, Motorola, Google, Facebook, AOL, and Brightroll.
Canada's latest anti-spam legislation aims to fight Internet malware and bots—but a big stumbling block is that most of the problem comes from outside the country.
Will these corporate and organizational responses be enough? For the following reasons and more, it's impossible to know:
I have no answer—only time, I suppose, will tell.
But others are coming up with their own answers—those large
corporations that are spending billions of dollars a year on online
display advertising. As Lara O'Reilly wrote in May 2015 at Business
Insider, $25 billion in ad spend is now under review in what Adweek is calling "Mediapalooza 2015." O'Reilly gives one possible reason:
Media reviews let brands reassess
their ad spending, often by offering those contracts out in a
competitive bidding process. The companies include General Mills,
Procter & Gamble, Volkswagen, Visa, Sony, Coca-Cola, Citi, 21st
Century Fox ... the list goes on. Some of these — P&G, Sony, and
21st Century Fox — spend more than $1 billion on advertising each
It could be
that marketers are finally getting fed up with the apparent lack of
transparency about where their budgets are actually being spent and why.
(Image of an Indian online-marketing team I used with rights in a prior Moz essay
on the future of marketing departments)
Regardless of what the future will hold, here are my recommendations on how digital advertisers can respond:
Beyond the current responses of the ad industry and my present
recommendations for marketers, I do not know what will happen. My goal
here is simply to explain to digital marketers what has allegedly been
occurring. What the future will hold—well, that's up to we marketers and
Given Google's extraordinary ability to solve incredibly complex
mathematical problems, it's extremely unlikely that: (1) they are not
aware of the scope of inaccurate (or fraudulent) clicks or impressions,
and (2) that they cannot fix the problem or account for it using a
mathematical model. "It is difficult to get a man to understand
something, when his salary depends on his not understanding it." -Upton
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